RH Proves Retail Is Far From Dead With New $50 Million Manhattan Location

More than five years in the making and at a cost of $50 million, the new RH Gallery sits at the center of the Meatpacking District. (Photo by Dimitrios Kambouris/Getty Images for RH)

If physical retailing is in fact dead or dying, somebody forgot to tell RH and Gary Friedman.

Heralded with a dramatic four-page ad in the Sunday New York Times declaring that "The death of retailing is overrated," RH opened the latest iteration of its progression to redefine the parameters of what a physical furniture and home furnishings store should be.

More than five years in the making and at a cost of $50 million, the 90,000-square-foot Gallery (RH never uses the word “store” or “flagship”) sits at the center of the historic Meatpacking District in lower Manhattan, a block from the new Whitney Museum and the High Line.

RH CEO Gary Friedman continues to prove that retailing is very much alive and well. (Photo by Marc Piscotty/Getty Images for Restoration Hardware)

Some three miles away is what CEO Gary Friedman says is the last retail establishment in New York City that was a game changer: the original Ralph Lauren “Mansion” store on Madison Avenue.

“This is the most innovative new retail experience in the world,” said Friedman, who has transformed what was once a $350-million-a-year seller of gadgets and mission furniture into the multi-billion dollar company that is widely regarded as the market leader in the home space.

Freidman’s goal? “We aim to be the disruptive dominator of the luxury home furnishings market.”

This new Gallery certainly raises the bar vs. both existing RH locations and the overall market, with a number of distinctive elements:

With 70,000 square feet of selling space it is one of the larger units the company has opened and encompasses the full breadth of the RH merchandising story: core interiors furniture and furnishings, RH Modern, outdoor, teen and baby and child, and home décor.

Special emphasis is placed on the interior design portion of the business with five glass-enclosed private workspaces that take the company’s designers off the selling floor and segment them for design. This is the first time RH has used this configuration and it says it will be its new layout going forward. “It’s one thing to say you have interior designers, it’s another thing entirely to put a complete design firm in the store,” Friedman said to investors, visitors and guests touring the new store the night before its official opening.

The rooftop of the six-story (plus a lower level) building is a full restaurant, with both indoor and outdoor space. Adding in hospitality is now a cornerstone of the RH strategy with most full-size stores going forward including this traffic-building element. “If you feed people and give them something to drink, they will stay longer,” he said, adding that shoppers will then presumably buy more things the longer they are in the store. “Hospitality is intended to amplify the brand.”

Hospitality will be taken to the next step this spring when RH opens its first GuestHouse hotel around the corner from the store, providing for an even more immersive experience with the company’s products and design aesthetic.

The New York Gallery, the 19th the company has opened, is expected to do $100 million in annual sales (at 28% margins), he said, once it gets up to speed, paying back its investment in around two years. RH currently operates a smaller format store in New York’s Flatiron District that does about $60 million and is expected to close once its lease expires.

The New York Gallery, the 19th the company has opened, is expected to do $100 million in annual sales. (Photo by Dimitrios Kambouris/Getty Images for RH)

The large-scale Gallery format is one of four distinct physical retail formats RH is planning to operate, in addition to its direct business that now runs in the mid-40% range. That’s declining as a percentage of overall business as more Galleries are opened. In addition to the New York-scaled store, which Friedman called Bespoke Design Galleries, there will also be: Bespoke Indigenous Galleries located in lesser major markets and not necessarily housed in historic or iconic buildings; RH Prototype Galleries in the 30,000-square-foot range for smaller markets; and finally, Secondary Market Galleries in the 10,000 to 18,000-square-foot range in markets that can’t support larger stores.

In addition to expansions of its physical base, RH will also be broadening its design aesthetic, introducing RH Color and RH Beach House programs next year, to be followed by similar extensions in ski, small space, organization, objects, tabletop and bath fixtures.

In the meantime, the new Meatpacking Gallery will be the center of attention in the RH world and, says Friedman, alluding to future international expansion for the company, perhaps the entire world: “You do something like this and the world is going to know about it.”